Rockville Bank president Bill McGurk thinks thievery is going on. He’s upset at a practice called “trigger leads,” in which credit bureaus sell instant lists of people on whom a mortgage lender has ordered a credit report. A homebuyer applies for a mortgage, a lender orders a credit report, the credit agency sells that information to competing lenders, those competitors call up the borrower and offer a better deal than the original lender.
It’s easy to see how that might frost the original lender. It’s snagged a customer – whether by due diligence or phonebook chance – and is paying the credit bureau for the credit report. It doesn’t want the credit reporting agency blabbing to the world that there’s a live deal ready to be closed.
Or, as McGurk testified Feb. 20 at the Connecticut General Assembly, it’s like spending all spring and early summer hoeing the garden, planting the tomato seeds, putting down fertilizer, only in August to have someone come by and steal “my nice, ripe, red tomatoes.”
The Connecticut Bankers Association hates trigger leads. So does the Connecticut Mortgage Bankers Association. So does the Connecticut Society of Mortgage Brokers. The state Department of Banking, too, endorses proposed legislation to ban them in Connecticut. So does Attorney General Richard Blumenthal. And, now apparently, the leadership of the legislature’s Banks Committee seems in sync to with those interests.
How can so many organizations have come down in favor of such an anti-consumer law?
What trigger leads do is allow organizations with better loan rates and terms to get to a consumer before it’s too late. On an average 30-year fixed rate mortgage, shaving even one tenth of a percent off the interest rate will save a borrower roughly $5,000. Our government is getting ready to put a stop to this? What in the world has possessed them?
It can’t be a desire to protect privacy. One fallacious argument trotted out is that consumers haven’t authorized this intrusion into their credit report. But credit report inquiries trigger lots of reports, including notices to the consumers’ credit card companies. Credit data is widely shared, and the only difference between trigger leads and “pre-qualified borrower” leads that banks and others routinely buy from credit companies is the speed at which they’re produced. The volume of unsolicited credit card offers alone is testament that banks have no qualms about using such leads when it suits their purpose.
No, the only thing at stake here is the lenders’ claim that they’ve worked hard to cultivate a client, and now someone else is coming in and stealing the customer. Maybe we also ought to be banning weekly sales at retail stores. Obviously, some stores have spent a lot of time growing their customer base. They certainly don’t want other stores poaching consumers by offering them lower prices or better service, especially not when those customers are ready to make a purchase.
The attorney general wouldn’t think of endorsing a law like that. And if the state Department of Consumer Protection commissioner endorsed such a measure, he’d be in line for a tongue lashing, if not a pink slip, from the governor.
Banks and mortgage lenders may not like the intrusion that trigger leads inject into the loan process. But there’s a sure way to safeguard their customer base: offer the best rates possible, and the best service.
Consumers are not tomatoes grown by the bankers. Lenders don’t own their borrowers. And the legislature shouldn’t get swallowed up in the manure being spread by these protectionist interests. n
